Bad Habits and the Endogenous Timing of Urges

Peter Landry, University of TorontoPosted onDecember 16, 2017

I present a theory of harmful addiction in which “giving in” to an unwanted urge (i.e. consumption) delays the recurrence of urges in the short-run, but increases their long-run frequency. The theory offers new predictions as to how the frequency, levels, cue-dependence, and temporal consistency of consumption evolve during habituation, while uniquely capturing near-term substitution in demand across time. New welfare implications for restrictions on consumption and on marketing are also addressed.